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The home loan modification minefield

Wajahat Ali wasn’t an expert in real estate law, but that didn’t stop him from helping a family navigate the government’s Home Affordable Mortgage Program. He talks to Tess Vigeland about the frustrations he encountered along the way.

TEXT OF INTERVIEW

TESS VIGELAND: Although millions of people are seeking mortgage modifications, fewer than 200,000 have gotten one through the government’s Home Affordable Mortgage Program. That’s one massive backlog. And the source of serious confusion and intimidation for home owners. So one troubled Sacramento, Calif., family decided to seek professional help. But the person they turned to wasn’t exactly an expert in real estate law. In fact, he didn’t have much legal experience at all.

Wajahat Ali was a newly licensed attorney. And he wrote about his efforts in a recent issue of Panorama magazine. Welcome to the program.

WAJAHAT ALI: Thank you very much for having me.

VIGELAND: You weren’t exactly a bankruptcy and home loan expert, right? I mean, at one point, you called Google your legal assistant.

ALI: Google is a fascinating legal assistant, which is also very free. So thank you Google. But no, I was an unemployed, recent law graduate, pretty much a John Grisham cliche. And not at all a specialist in any term of the word.

VIGELAND: How much did you know about bankruptcy law and home loans?

ALI: I learned as I went along, and I had basically six months before taking this case, been devouring all information I could. So, it was enough where I could talk to a client and explain how the system worked, but I had no idea it was this insane and intricate, and essentially, like ramming your head against the wall when trying to get a loan modification.

VIGELAND: Tell us about what it was like. When you first met with the family, they had two days before the foreclosure took effect. Talk us through what you did.

ALI: All right, so family comes. You’ve got two-and-a-half days. I’m like, “You’ve got a notice of default?” They say, “No, we have the foreclosure sale.” I’m like, “Fantastic.”

Two-and-a-half days left, it’s going to be sold. I said, “You’ve gotta go to a paralegal and get a bankruptcy filing.” The reason for that is, if you file for bankruptcy, in an emergency filing, you get an automatic 15-day extension, which a lot of people don’t know. Secondly, I had to create the loan modification package in two days. So I’m talking about why they’ve lost income, create essentially an Excel sheet with their finances, create my legal demand letter, review their documents… And the whole time, you know, a lot of people don’t know there’s no direct line for attorneys. You wish there was. So we go through the same automated machine that you guys do, we have to listen to the same terrible elevator music and then you just go around. It’s like a Jackson Pollock painting; it’s just everywhere, it’s just chaos.

VIGELAND: I think that’s what really struck me about this story, was you really lay out how difficult it is, not just for home owner, but for someone who’s trained in law to navigate this minefield that is home loan modifications. I mean, you went through phone tree after phone tree; person after person; people who didn’t know even what you were talking about; people who said, “Well, fax me this,” “Oh, I didn’t get your fax.” I mean, at some point, weren’t you just ready to give up?

ALI: You know, yes. You sit there exasperated, angry, frustrated, and because you’re a young attorney, you’re always terrified about losing your bar license — and especially, when it comes to loan modifications, because you keep hearing about all these shady loan mod people. So, because they gave me their money, and because they entrusted me, and because it was a family of five, and because I met them, and because I knew how much this house meant to them. And because I know how much a house means to a family, you know. I knew I couldn’t give up, because a family’s literally depending on you as their last hope.

VIGELAND: You talk about the surprise that you felt when one of the bank reps told you that the bank stalls these things on purpose, until the very last minute. And I guess the surprise really comes from the fact that you’d think they’d want to come to some resolution where they’re getting money from a borrower, right? But that doesn’t seem to enter into the equation.

ALI: That’s the thing. What people don’t realize is that everyone else is “OK, corporate, evil. These guys are just terrible people. They have horrible intentions.” That might or might not be true, but what really trumps at the end is the fact that they’re very incompetent. No one really knows what’s happening. This guy pretty much, who I talked to, admitted to me that the bank does not look at your file until the three-day mark. So if you have a notice of default, or if you’ve got a trustee sale date, and the trustee sale date’s in three weeks, you’d think, “OK, let me get the ball started, make your life easy,” get all the paper work, you know, just to make sure everything’s done early.

VIGELAND: But they told you to wait until three days before the foreclosure date.

ALI: Yeah, they were like, “Nah, just wait three days before the foreclosure date.”

VIGELAND: I wonder, do you think that this was more about persistence or expertise?

ALI: My particular case, like I claim in the article, it’s just straight, sheer persistence and luck, and you know prayers, I guess. The fact that I did the research and the fact that I found out a few strategic tips and used them and employed in a way that was convincing, what made the best use of, I guess, my relentlessness and my law degree. And the fact that I’m just crazy.

VIGELAND: Well, that craziness certainly got you somewhere. You finally got a reprieve for this family from the government’s Home Affordable Modification Program. What would you tell home owners who are in a similar situation and who perhaps don’t have the funds to hire an attorney?

ALI: What I would say is have good counsel, if not even an attorney, you know, there’s a lot of nonprofit agencies right now. Be honest with yourselves. Your house does not define you; you know, having a house or not having a house will not make you any more or less of an American. It’s OK to let go of that toxic asset. Rent.

If however, you think you can make it, then you know what, try your best. Talk to people like me and other people, get free resources and fight on your own.

VIGELAND: Well Mr. Ali, congratulations what I suppose is an early success. I know it’s not over yet for you. But thanks so much for your time today.

ALI: Thank you very much.

VIGELAND: And a little late breaking news: The family is heading into final negotiations with Wells Fargo to make their modification permanent.